Greece passes reform bill, government majority shrinks to two seats

BY ANGELIKI KOUTANTOU AND RENEE MALTEZOU

ATHENS Sun Mar 30, 2014 8:03pm EDT

(Reuters) - Greece approved on Monday a contentious reform bill to secure bailout aid but the government was forced to expel a dissenting lawmaker, reducing its majority in parliament to just two seats.

A total of 152 lawmakers backed the bill, which incorporates into Greek law hundreds of reform measures Athens agreed earlier this month with the European Union and the International Monetary Fund after more than six months of tough negotiations.

The passage allows Athens to obtain loans to repay 9.3 billion euros of debt maturing in May, but left the fragile pro-bailout government with a new headache as three deputies refused to vote or voted against key articles in the bill.

"It was a tough but crucial bill for the country's future; the lawmakers stood up to the challenge," Finance Minister Yannis Stournaras told reporters after the vote.

Prime Minister Antonis Samaras expelled one lawmaker who failed to back one article, while the Socialist PASOK party, one of the two ruling parties, was facing a new crisis after one of its lawmakers did not vote and another voted against an article.

PASOK, a once-powerful party that has been virtually decimated following Greece's debt crisis and has little room for manoeuvre, did not expel the two lawmakers but admonished them.

In practice, the government needs only 148 votes to pass bills in the 300-seat assembly since six lawmakers from the far-right Golden Dawn party are in custody pending trial. But losing any more deputies would be a clear setback for a government under pressure to show Greeks an unpopular austerity recipe is bringing the country back on the road to recovery.

The law had caused friction within the coalition for hurting vested interests in the dairy, publishing and pharmacy sectors and led to the resignation of the country's conservative deputy agriculture minister on Saturday.

STONEWALLING

Still, in addition to securing aid to get through the biggest refinancing hump the country faces in the next three decades, Samaras now can face crucial local and European elections in May after passing a 527-million-euro spending package for poor, austerity-hit citizens included in the bill.

A new poll published on Saturday, the first conducted since Athens agreed the new reform package with its lenders, showed New Democracy nudging ahead of the main opposition, the leftist Syriza party, for the first time in six months.

Thousands of demonstrators rallied outside parliament on Sunday to protest the reforms debated in a fast-track, two-day session. Samaras had to pass the law before a meeting of eurozone finance ministers in Athens on Tuesday, which is expected to review Greece's reform progress and set a timetable for the disbursement of the next bailout funds.

In a heated parliamentary debate, government and opposition locked horns over a clause in the 225-page bill that allows Greece's bank bailout fund HFSF more flexibility and legal cover to sell bank stakes it holds to private investors.

"Today, Samaras' government is pushing the Greek economy and Greek people deeper into the grave," Syriza's leader Alexis Tsipras said, before calling a censure motion against Finance Minister Yannis Stournaras.

The motion was rejected, prompting Syriza lawmakers to exit parliament and join the protests outside parliament.

Samaras accused Tsipras of trying to stonewall the debate and thwart the country's bailout receipts.

"They wanted to make Greece ungovernable but we'll never allow that," he told reporters after the vote.

Samaras now expects lenders to disburse the funds and start talks soon on how to provide further debt relief for his country, most likely in the form of a further extension of maturities and a lowering of interest rates on its rescue loans.

Greece has already obtained about 218 billion euros out of its 237-billion euro bailout, which started in 2010.

(Editing by Harry Papachristou, Deepa Babington and Eric Walsh)